Early Retirement // Financial Independence // Adventure // Happiness

Waking Up in a Paid-Off House // A Farewell to Our Mortgage

I’m writing this on Tuesday (one day before the post publishes), and today, something magical happened for the first time ever.

Today, we woke up in a house that is completely ours.

We knew this moment would come, though it is here sooner than we could ever have imagined. Five years, four months, two weeks and two days after taking on our mortgage, that mortgage is suddenly gone.

It’s a weird feeling, knowing that this roof above our heads, this floor beneath our feet, all the wiring and insulation (and who knows, maybe dead mice?) inside the walls, every bit of it belongs to us. It’s kind of a terrifying thought, actually, but it feels amazing too. (And, not gonna lie — I’ve never felt so instantly grateful to have homeowners insurance, maybe because for the first time we’re truly homeowners. This is now our single greatest asset by a long shot.)

Our monthly expenses have just plummeted by almost half, our savings rate is about to hit truly absurd levels, and we never have to worry again about whether we’ll be able to provide shelter for ourselves. I’m not sure it has all sunk in yet, but while we wait for that to happen (and while we repeatedly pinch ourselves and feel huge waves of gratitude that this was even possible), let’s bid adieu today to our mortgage.

Why We Paid It Off

Our very first big comment post was a lively debate on paying off the house vs. investing that money instead. And certainly most people naturally lean one way or the other. For those who don’t mind debt or even think of it as leverage to use to their advantage, it’s a no-brainer to pay a low-rate mortgage on time and invest as much as possible instead. On paper, this is a smart way to go the majority of the time, unless you’re unlucky enough to be making that choice right before an extended bear market.

But for those who hate debt (Oooh! Oooh! Me me me!!), it’s a no-brainer to pay off the mortgage as fast as possible. That interest we’re no longer paying is a guaranteed return, while there’s nothing guaranteed about market investments. And try getting a guaranteed return of 3.75 percent anywhere right now… outside of a mortgage, there’s nowhere that’s gonna happen. Plus, as I like to say: You can’t put a price tag on peace of mind.

At the end of last year, we were debating putting our year-end bonus excess into investments instead of paying off the mortgage, but ultimately the coin flip went this way, and we’re totally happy about it.

We’ve always said we wanted to have a permanent home base in retirement, even when we’re traveling a lot, and for us that meant having the house paid off before we pull the plug by the end of this year. Not everyone wants that home base or wants to own property, and we totally get that. But this felt like the right approach for us.

Actually Paying Off the Mortgage

It turns out that the act of paying off our mortgage was both annoying and surprisingly easy. Here’s how it happened:

In December, after deciding that we’d pay off the house instead of investing our year-end funds, we logged into our mortgage servicer site (that would be Ocwen, the worst servicer in the world — seriously consider refinancing if your lender tells you that Ocwen will be servicing your loan). We saw what our balance was, said, “Great, let’s pay that,” and tried to put in the payment amount.

No dice. The computer kindly told us that some official federal rules prohibit us from paying off a mortgage online. (Maybe it’s to do with money laundering? Or it’s to force you to give the banks a few more days to charge you interest? I’m guessing the latter, but didn’t look up the actual reason.) Instead, we could pay off 80 percent of the balance online, and then would have to request a payoff quote and wire transfer the balance. (Why we were able to pay a fairly huge amount online yet had to wire a comparatively small amount is beyond me, but Ocwen’s answer: “Them’s the rules.”)

At this point it was near the end of December, and we decided that we’d just push through the 80 percent payment online, let our normal January 1 payment credit, and then request our payoff quote. We received that quote late last week, and on Monday, I called USAA (our bank whom we love to pieces, BUT they are also the lender who sold our loan to GMAC, which folded, landing our mortgage with Ocwen, the worst servicer in the world. Have I mentioned they are the worst servicer in the world? The. Worst.). It took about five minutes on the phone with USAA to push the wire through, they confirmed for me on the phone that the money had credited into the Wells Fargo account Ocwen uses, and then I figured it would take a few days for the payment to credit with Ocwen.

Nope! It credited with Ocwen within the hour, which I know because we both started obsessively refreshing, even though we said we wouldn’t do that. But when the magical “$0.00” popped up, we both got big, stupid grins on our faces and our eyes got big and crazy.

We had really done it. We had paid off our house in just over five years.

More importantly, we had just bought our freedom in a more real way than anything we’ve done so far. Though hitting basic financial independence last year was a bigger milestone on paper, this was the first time we could really look at something and think, “This is ours, even if times get tough.” No matter what the markets do — even if they crash tomorrow — we’ll have this house. And if a natural disaster knocks down this house, then our insurance will build us a new one that we’ll own instead.

A Few More Follow-Ups

Turns out when you pay off your mortgage, you’re not totally done dealing with all that lender and paperwork stuff. There are three main tasks that we still have to complete:

Get the lender to release the lien on the house with the county recorder.(Thanks to Vicki for flagging this for us!) This isn’t urgent, and they should do it on their own, but should something happen to our house, we won’t want to have to have a lender standing between us and an insurance check. It’s possible we might have to pay a county clerk fee for this to be rerecorded properly — that appears to be locality-specific.

Get our property tax bill redirected to us. The thing I’ll miss most about the mortgage is the escrow account. I love not having to worry about paying property taxes, but the trade-off for not wanting a mortgage anymore is we get to pay that bill ourselves now. We have a bill due fairly shortly, so we will reach out to the county tax office and make sure Ocwen (the worst!) refunds our escrow balance in a hurry.

Remove the lender’s name from our insurance documents. Right now our insurance documents show the original lender as the owner of the home, and we’ve essentially been buying their insurance for them. So nice of us, right? But now that we’re insuring ourselves, we need to get that all cleared up. We’ve also heard that we can get a higher deductible now that we own the home free and clear, so we’ll be investigating whether that’s a good trade-off.

What This Means for our Finances

While we expect to feel some sparkly feelings for a good long time whenever we think about paying off the mortgage, the most exciting near term implication is what this does to our savings rate.

We thought we wouldn’t be able to pay it off in full until the second half of January, or maybe even first half of February, but with an official payoff date of January 9, we can still make our full mid-month Vanguard transfer this month. Wohoo! Then starting in February, we’ll be able to put almost as much into Vanguard on the first of the month as we do mid-month, which still feels like crazy talk, but will get real in a few short weeks.

Here’s the stat: paying off the house will let us increase our monthly saving and investing by nearly 50 percent. :::insert eyes popping out of head cartoon here:::

And, it means that any bonuses we get at year end can can go straight into investments and our cash buffer accounts. Not a penny has to go against the house. Even if we have a completely underwhelming year at work, we should have no trouble reaching our stretch goals for this year.

We still have the mortgage on our rental property, and we currently have no plans to pay that one off faster than planned, so we aren’t going to call ourselves debt-free. But with that last payment we feel meaningfully free in a way that’s entirely new to us. It feels like a new tailwind pushing us forward in our already semi-charmed lives, getting us ever closer to our goal of full financial freedom in a few short months.

Share Your Thoughts!

As always, we love hearing from you in the comments! Do you think we did the right thing, or should we have sunk that money into our investments instead? Anyone else paid off a big debt recently that you want to call out? We’d love to send a virtual high five your way! Any unexpected lessons when you paid off a mortgage that you can share with all of us? Let’s talk about it all in the comments!

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Wife and I also paid off our $500K mortgage about 5 years ago. Ever since then, I’ve noticed we have more free time and money to fight about other things. Now I’m starting to wonder if paying off our mortgage was a good thing.

I didn’t have the elation going at , but T 47 my 350k house is paid for. I have about 600k in a portfolio, and I think I will take a couple years from being a savings Nazi and enjoy a little. Then back at it until retirement.

We paid off our mortgage in 15 years and feel the debt relief! Paying off early is good… however, when we got out in years the interest amount had dropped significantly. Our loan had front-loaded the interest paid, as I’m sure most loans do. So, I suggest paying off the house very early, or at least look at the effective rate you will pay on the balance.

Congratulations to you both! We can only imagine how amazing that must feel. We are working our way toward paying off our own place. We have regularly debated whether to do this or throw the money into Vanguard. But with an interest rate of 4.35% (we’re slightly higher here in Australia), it really is a no brainer and the emotional impact is huge! Thanks for all the inspiration!

Thanks so much! It does feel amazing, though I think it will feel much more amazing once we actually reach our first month with no mortgage payment. :-) And I agree with you — the emotional impact of paying down or paying off a mortgage really is much greater than investing all of that money — that’s gotta count for something, right? ;-)

Congratulations on paying off your mortgage, we started overpaying both our home and summer lake mortgage about a decade before we completed both. By using everything from tax returns, work bonuses to even spare change – we did it! We too have been using what we were paying towards the mortgage maximizing Roth’s, and other investments. Perhaps the grass is always greener on the other side, but we sometimes wonder if the early dollars we put towards the mortgage could have produced a better return in the market. Regardless, I will say that the experience of concentrating on the mortgage for over a decade has made us think about debt, spending and investing differently. For those that say we made a mistake, usually when I ask if they would take a home equity loan to place money in the market they understand better – again congratulations!
Kirk

Well done! We did the same last August and it all felt a bit surreal, until the first month we redirected the mortgage payments to savings and investments – then it all got real!

We had similar issues with closing our mortgage account (the bank took one further payment which put our mortgage account in credit!) plus we had to remind them to remove the second legal charge (lien) at the Land Registry (county recorder). Our savings and investments are building nicely now and, all being well, we’re on track to FIRE in 63 weeks (yes, we are counting!).

Thank you! And wohoo to you for paying off your mortgage!! I suspect it will feel similar for us — once we actually put that money into investments on February 1, we’ll feel it in a whole different way. How great that you’re only 63 weeks away! That’s so similar to our timeline. Here’s to a great final year of saving!

Congratulations! I’m so excited for you! I’m not doing a whole lot but I figured out away to pay off our mortgage within the original amortization period. It’s still a long way off but my savings accounts make me feel good as I want to vacation, do home repairs, and buy a car within that time period as well.

Thank you! And thanks for sharing in our excitement! :-) We’re big believers in balance, so I totally appreciate that you want to go on vacation and spend on some other things while you’re saving, and not put ALL your money toward your BIG goals. You’re headed in a great direction!

I’ll take the guaranteed return any day–guaranteed peace of mind. No matter what happens in retirement, you have a place to call home and that’s one of the many reasons why we paid off our mortgage, too.

WAHOOOO! Congratulations! I also have no mortgage…. But that’s because I don’t own anything haha. I think you guys made the right decision solely based on your giddiness after doing it. You did what made you happy, hang the math (and the worst, Ocwen). Now you can save ALL the monies!!

Hooray and congratulations again! I can’t wait to join you in a few years. P.S. I have Nationstar which should be tied with your company for the honor of THE WORST mortgage servicer. The only reason I haven’t refinanced to get away from them is because I can’t get a 2.75% rate anymore, plus I’m not paying extra money because of them. Debt freedom is a huge weight off the mind!

I hate them so much I make them mail me paper statements so it costs them postage. Then I shred the statements and pay online so I don’t have to use a stamp 😈it’s my own (small) rebellion against their incompetence

Haha! That is totally something I would do except that I am crazy focused on reducing the amount of paper that comes into our house. ;-) (Big fan of Catalog Choice for reducing paper, btw! https://www.catalogchoice.org/)

Woah! Congrats on this huge accomplishment. Even though they were at a super low rate – we just finished paying all of my wife’s student loans. Perhaps it would have been “better” to invest the money – but she really wanted to just completely eliminate this debt. Got to say – it feels great to get rid of an entire row in the liabilities section of our net worth tracker! Can only imagine how much better it will feel when we someday knock out the mortgage.

Thank you! :-) Congrats on paying off your wife’s student loans! How exciting! I totally understanding wanting to be free of the debt, even if there are “better” financial decisions out there. Getting that monkey off your back is invaluable, and sometimes just trying to simplify your finances makes the most sense, like knocking off whole rows on your tracker. :-)

Like your post. My wife and I r about to put that 180K mortgage to rest. Start now! regardless what financial planners say. The result will completely change your life. Debt free is going to be amazing

Congrats. I’m sure it feels fantastic. You hit the nail on the head with saying to pay off or not is a personal decision. If it makes you sleep better and keeps you invested with the rest of your cash then it’s the right call. We are still a few years from payoff but we chuck in extra cash from time to time. I look forward to dealing with those minor annoyances you mentioned in exchange for owning my home out right.

Thanks! It DOES feel fantastic. And YOU hit the nail on the head that whatever helps you sleep better at night is the right call. For us, that was paying off the house, while for others it could be investing or making a totally different decision.

Wow! Such an awesome post today. Having your home owned free and clear is a wonderful feeling, and getting rid of a lousy mortgage servicer is a cherry on top! Not to mention being able to accelerate your savings rate and potentially even move up your quit dates. Congratulations on sticking with your plan through thick and thin. You are proof this FIRE stuff works (if you work it).

Thank you! Yeah, I’m almost as happy about ditching the mortgage servicer as I am about the loan itself. Haha. We *hope* we’re proof that FIRE works, though we’ll know that better once we actually pull the plug. ;-)

Woo Hoo! Totally agree about the feeling of having a paid off mortgage. Yep – in NY, they’ll charge us for anything they can. Pay off your mortgage? Pay a fee. If they can take you for $50 or $100 – they will. And our bank didn’t even let them know, so there was nothing automatic. We got a letter that we had to go to the County Clerk’s office to do it. I felt good writing that check though and smiled as I handed it to her. I don’t think they actually see people there to do that too often! Can’t wait to hear how it feels to re-direct those payments too!

Thank you for mentally preparing me to (maybe) pay some fees — I’ll be prepared if it turns out we need to! I’m sure if we end up having to do that, we’ll get a similar reaction. The very few people we told we were paying off the house who aren’t super financially savvy all said something along the lines of, “You can do that?!” Both funny and sad. :-) :-(

How do you feel about Ocwen ;-)? I have Wells Fargo (which surprisingly has been fine with the mortgage) and it seems to be with them.

I call the payoff of mortgages our inflection point, because that’s when the switch gets flipped and our rental income will pay for around 100% of our expenses. (The house and rental properties get paid off at around the same time.) Still, I have a hard time giving up the math and I’m not as conservative about taking the 3-4% guaranteed return.

However, this brings up an interesting question, “Wouldn’t you get something closer, or even more, to a guaranteed return paying off the rental property?” I know there’s a great comfort in owning your dead mice walls, but why not make the mathematical decision to pay that off and unleash another income stream before you retire?

Oh I love Ocwen! Hahahaah. How cool that you pay off both mortgages around the same time — that will feel straight up amazing! And the Q of whether we should also pay off the rental is a good one, but even with a 15-year mortgage, the rent is more than covering it, and given that that mortgage interest will always be a write-off because it’s its own tax schedule (not like our house interest, which we couldn’t claim after retiring because we’d no longer itemize), we’ve decided that we’re fine paying that one on time and focusing our saving on the taxable investments that will sustain us until the rental mortgage is paid off and that turns to cash flow. Of course, if we have unexpected windfalls after we retire, we may make a new assessment! Or we might end up putting an extra $100 or so against the rental mortgage one day. And, as always, this could all change down the road. :-D

I have all 4 mortgages finishing around that time. Two were refinanced on the same day and one (our primary residence) was purchased the year before and the other was bought the year after. Interest rates and housing prices in 2012 were good ;-).

Thanks for the answer on the taxable rental. I hadn’t thought about itemizing taxes after you retire and having that be a factor with paying off your current home. I was thinking more of what I thought I read in taking the guaranteed 3+% as a good thing.

Gotcha! Wow, you’ll have a lot to celebrate in a short period! Thank goodness for those prices and rates in that time… we bought in late 2011, and feel lucky every day that we did! This payoff would not have been possible on this timeline if we’d bought at any other time!

We won’t have enough deductions to be able to! ;-) (We’re hoping to sock a big chunk of change into a donor advised fund this year, and we’ll give to charity out of that in retirement — so no “new” tax deductions for charity. Also no mortgage interest — it would have been too small to qualify anyway.)

Congrats to you both on this major accomplishment! I have debated this in the past many times. I bounce back and forth between thinking investing and keeping the mortgage is best, and thinking the inverse is the best. Ultimately, we had also landed on paying our mortgages first. We are focusing on our rental property first, since this has the higher interest rate. Then we will use all the passive income from that and add it to the extra we were paying on the rental to knock out our own home. I know this is “stupid” to some ppl considering the power of leverage and considering the fact that our interest rates on both properties are quite low: 3.99% on the rental and 2.75% on our home. But we don’t care. Like you said, you can’t put a price tag on peace of mind. And we’re all about keeping our expenses as low as possible. Once again, congrats!!

Thank you! :-) I totally get that indecision between the two! And our calculations tell us to leave the rental mortgage alone (though it’s only 3%! We still think the bank made a mistake! LOL), but I get that it makes more sense in your case to pay it off. Cheering you on on your quest for debt-free peace of mind! :-)

Congratulations!!! I am firmly in the invest camp myself (and I’m married to a math whiz, who won’t even let me pay off $10K of student loans faster than the payment because the interest is sooo low.) But I can completely understand the feeling of joy and elation you must be going through. After all the challenges you had last year, I hope you are taking some time to celebrate and properly mark the occasion–frugally, of course!

Thank you! And you get mega points for not scolding us for giving up potential investment gains! ;-) Hahaha. We totally get the logic of investing instead, of course, and would have been fine making that decision, but I’m super happy we made this one. And thank you — YES, it feels great to have this nice win after the last year of work. I’m hoping that this gives us a nice boost to propel us a bit this year!

Congratulations! We paid off our rental property a few years ago and had a similar issue. I first called the bank and let them know I wanted to pay off the mortgage. The rep didn’t know how to proceed! She never had anyone call trying to pay off the mortgage. So she said to send any amount except the total due. Leave a small balance on it and that that balance needed to be sent via check after the payoff quote. Weird rules but it got it done.
Even though we rent for work distance convenience it’s nice to not have any debt at all.

Thank you! Isn’t that crazy that the bank rep didn’t know what to do with you?! A few others have commented today that they WERE able to pay off the full balance online, so there are clearly different “rules” out there (or whatever rules the person happens to make up on the spot, maybe!). Congrats on being debt-free! :-)

Forgot to add one thing to my comment… The interest rate on the rental property loan was around 7.6%! Refinancing was going to cost around $3,000 and there were other issues that wouldn’t make it an easy process. So we decided to just pay it off.

Once again, congrats on paying off you’re house (insert Snoop gif)!! I’m with you guys – I HATE debt so I would have paid off the house first. I’ve only got 10 more years left on my mortgage. Can’t wait!!

Thank you!! :-) I’d put money down that you will pay that mortgage off faster than that. That’s how this good FI momentum works… stuff starts happening much more quickly than you can imagine once you get things rolling.

Congrats on getting that paid off! That’s got to feel nice. We don’t have any plans to pay off this current house, but we do plan on buying outright once we move and settle on a locale. Maybe rent first for a yr or so, but then find our house and go back to no monthly rent/mortgage payment.

So now that you have this excess money each month, have you thought about putting it into more/better insulation, or better windows or something that would let you set the thermostat above 55 and not have your utilities increase dramatically? With this being most likely a forever sort of home, I was wondering if you guys had looked into those type of upgrades or if it was that sort of thing that made it so expensive to keep the house in the 60’s during winter.

We had the reverse problem in our LA house during the summer, and just adding some insulation additions in key spots, and UV window film turned our oven into a comfortable place to hang out. I did the same with adding window film and solar screens to a few key windows in this house and we saw a reduction in our utilities and weren’t able to feel a big temperature difference from room to room anymore. Just a thought. :)

Thank you! And I’m so sorry about your doggy. :-( We love our canine family members and know how hard it is to lose them. Sending you guys lots of love! xoxoxo

Re: insulation, HELL YES we are going to do more of it. The issue has been less about home equity or money and more about time and hassle. We also have crappy drywall, so my vision if we decide to stay in this house is that we’ll do one room a year and replace the insulation and drywall, and maybe do windows in a few cases (though the windows are actually pretty good). We just haven’t had the mental energy while working to deal with the messiness of that, even if we outsourced all the work (which we also wouldn’t want to do, since this is well within our skill level).

I get not wanting to deal with that hassle, that alone is a big turnoff for home reno projects. The only house I lived in in CO that sucked at holding heat had a similar issue as you where if we wanted it in the 60’s it was close to $400/month… Blech, and this was a 1200 sq ft house, so fairly tiny too. Needless to say I only spent one winter in that place.

When we redid the minor issues in both our houses, I was amazed by how big of a difference even just those minor tweaks made. In both the utilities and the apparent temp of each room. Good luck!

Totally appreciate the moral support on this one — we are DEFINITELY going to address the insulation if we stay in this house. I actually think — not that you need this level of detail! — that we *have* technically ample insulation in our walls, but that it’s installed badly, so I don’t know that blowing more insulation in would solve the problem. Blech. Is it weird how excited I am to have time and brain space to reinsulate our house?! ;-)

Great move and congratulations! I’ve written reasons (financial and psychological) for my opinion on paying off the mortgage vs investing so I think you’ve made the right move. You won’t regret it. If you do regret it, you can always take out a new mortgage and invest the money in the market……I somehow doubt you will be doing that. You’ll continue to be happier without the mortgage.

I remember taking out a new mortgage after a work relocation to a more expensive area. After one mortgage payment, I decided I couldn’t go back to a mortgage and used some investments to become mortgage-free again. You won’t go back! Again, congratulations.

Thank you! I think you’re right… it would be a mighty cold day in hell indeed before we’d get a new mortgage on this place. ;-) I’m sure some PF people would tell you that your choice to sell investments to pay off your mortgage wasn’t a great move, but we all have to do what feels right to us. Congrats on being mortgage-free as well!

More awesome than an awesome possum!
When we paid off the mortgage on our mountain home, we were like kids in a candy store. Every time we go up there, we pinch ourselves that it is all ours. I can’t imagine how we will feel when we sell the primary home next year and are completely debt free.
That extra monthly payment into Vanguard will be a great thing to watch and here’s to the markets holding steady at least and you watch your pile continue to escalate.

Thank you! Kids in a candy store is a good description! I feel way more excited than I would have expected to feel, actually. Can’t wait for you guys to sell your city home next year and be completely mortgage-free… so much excitement on the horizon!

As someone who paid off her mortgage early, I definitely think you did the right thing! Doesn’t it feel amazing to know that, no matter what happens with the stock market, you’ll always have a place to live?

As a renter, I cannot even imagine how glorious this must feel. Good for you. You have obviously worked hard to make this day arrive and deserve to enjoy the security that cannot be taken away from you. Bravo!

Congrats congrats!! This is so awesome! I love that I can feel your excitement in your tone! You must have made the right choice! 😊 Go forth and save all the money!

It’s a bit weird to read about your payoff as I start my mortgage journey. I tried to set up my account yesterday to make my first payment, but my account is still lost in the ether. That’s what happens when my loan gets sold. At least they didn’t sell it to Ocwen!

Thank you thank you! To be honest, I actually feel way more excited than I thought I would be. I figured it would be just another financial milestone, which we’ve had quite a few of at this point, but it feels much bigger than most. So something for you to look forward to down the road! And do you know for sure that your loan was already sold? Most servicers are just fine, so the selling isn’t itself a bad thing — it’s only bad if you end up with one of the bad ones!

Thank you! We just killed a mouse in the garage today, so one less mouse to die in the walls. Hahaha. Good Q on who we’re telling — we’re NOT going to announce it on Facebook or anywhere high profile. We’re just telling a few select friends and relatives who know our plans.

Congratulations you guys! That must be the best feeling in the world knowing you don’t have a mortgage bill going out any longer. We took the other route by contributing to our retirement accounts, but if our house was paid off I wouldn’t feel bad at all about that.

Good job though! Man, 5 years is truly incredible! Some people don’t pay off cars in that short a time. Ha!

Thank you! It is a great feeling, indeed! Though as Mr. ONL just said to me, it will feel real once February 1 rolls around and we don’t have to make a mortgage payment. I think saving in your retirement accounts is super smart, and we wouldn’t have done this if we hadn’t already maxed the stuff that was available to us. We were just super lucky in 2016 that we had some slush funds at the end of the year, and we feel crazy stoked that they were actually enough to pay off the mortgage. :-)

“Personal finance” is equal parts “personal” and equal parts “finance.” I think you did they right thing by considering both. I always say that if I buy a house (and interest rates stay about where they are) that I’d pay it off over 30 years – but I know myself too well to believe I’d let it drag on that long. Congratulations!

Amen to that! This was a personal decision all the way that was at least justifiable financially. ;-) And yeah, it’s one thing to say you won’t prepay a mortgage, but when you look at that bill every month and you see that balance hanging over you, it’s hard not to want to just knock it out. ;-)

Interestingly, I actually hated the escrow account and when I refinanced my mortgage, I made sure to not include that feature. You get an obvious bill in the mail from your tax assessor, I don’t think you’ll forget. :-D Actually, if memory serves, you still get the bill even when it is paid out of an escrow account.

I wanted more control over when I could pay it (for bunching tax deductions) or for using that spend towards hitting a sign up bonus (…who cares about paying a 2% fee on $1,500 if you’re going to get $500 cashback….)

Congrats on the awesome achievement. I’m surprised that USAA didn’t just service your loan. I guess I’m lucky, but when Bank of America had my loan, they serviced it, and when I refinanced to Fremont Bank, Fremont bank serviced it.

I’m not afraid of forgetting to pay the property tax, I just hate writing big checks! Hahaha. And we do sort of get a bill now, though it is clearly an FYI copy for taxes more than an actual bill… this will all be stuff we figure out soon. And thanks for the congrats! It’s a weird quirk that USAA didn’t service the loan, and they’ve certainly heard multiple earfulls from me on how unhappy we are about it. We also had a BofA loan once, and same as you, they serviced it the whole time. Oh well, glad to be done with Ocwen forever! :-)

What I ment: considering you have described in a previous post what all could go wrong and how you have multiple contigencies in place, I was wondereing why you would not build up more cash now to kill the other mortgage as well or to have a good fat cushion. In my mind, thatis what I would hypotehically do (although we all now that no 2 cases are the same)

1. Sorry to hear about ocwen. I used chase. They let me pay it off online. In the following days to weeks I got a check for a few dollars to close out the account and a copy of the lien release doc (and I didn’t escrow). It was all pretty automatic.
2. Your savings rate didn’t suddenly skyrocket. All principle paydown was already part of your savings rate. Your interest portion was probably pretty low over the last year, and now it has totally evaporated.
3. Libertarians (like my dad) would argue you still are just leasing the home from the government… for the low cost of property taxes. This is only important for the psychology of ownership.

Chase seems to do a decent job with customer service, so I’m glad they treated you well on the mortgage front! We’ve had awards cards with them for years, and have never had trouble dealing with them. And you’re technically right about the savings rate, though watching our actual liquid accounts increase faster will sure make it feel like a big change, since the equity we have in our house is essentially irrelevant unless we want to move.

Also, I saw the “loan balance $0.00” graphic and I said “I know what bank that is, that’s USAA, they rock!” As a USAA member myself and a newer reader of the blog I’m curious how you guys earned your membership? Did you or your family serve?

Thank you! And other than USAA handing our loan off to GMAC, which led to us getting stuck with Ocwen, we’ve been 100% thrilled with them and have a million accounts with them. :-) We both got USAA memberships through our dads, who both served (you can read more about them here: https://ournextlife.com/2016/11/07/retiring-on-our-terms/).

Congrats!
Count me in as someone who likes the leverage and won’t pay off the mortgage any sooner than necessary. I currently pay 3.25% and saving in an asset with a 1.25% real return (assuming 2% inflation) just doesn’t feel right. Especially, given that I like 4+% real return while saving for retirement and 3.25-3.5% real return during retirement (=my planned withdrawal rate).
But then again, I have always acknowledged that we shouldn’t look only at expected returns (equities clearly beat the mortgage) but also the risk dimension. Getting close to retirement or in retirement, there’s a case for living mortgage-free, for sure. It will be easier to respond to poor equity returns early on during the retirement when you don’t have that monthly mortgage payment hanging over your head.

Mortgage servicers? They all tend to have bad customer service. I’m afraid it’s almost by design. :)

Thank you! All of your numbers make sense, though if we go into a bear market tomorrow, we’ll be looking pretty prescient not dumping more money into the markets right before a crash. ;-) Hahahaha. And your point about risk is super important, too — we’ve now dramatically decreased how much we need our investments to return for us, which feels right to us… but we completely acknowledge that others might have the exact opposite point of view on this, and that’s all good! Here’s to a fruitful 2017 on the investment side all around! :-)

About a decade ago I worked as a HUD housing counselor, and one of the things I did on the regular was call mortgage companies on behalf of clients in foreclosure and try to negotiate terms to keep the house. Ocwen was absolutely the worst. I was always convinced they operated out of a dim basement somewhere or a barge floating in the middle of the ocean. I’m not a homeowner myself, and I swear it’s partly residual trauma from dealing with mortgage companies for three years (some of them were great; even some that were crappy had divisions that were super responsive; and some of the worst ones had one person who was like model of rectitude, professionalism, and expertise; it’s a crapshoot, really).

Oh, I’m so happy you wrote to share that! We knew that Ocwen was horrible, but hearing it from someone who dealt with them on a professional basis is great validation. :-) Like why wouldn’t they want to work with you to avoid having to do foreclosures?!?! Every time we did an extra principle payment, they would take interest out of it anyway, and we’d have to call them multiple times to get it fixed… small potatoes compared to them not playing ball on people’s potential foreclosures, but still unethical and enough of a headache that we’re happy to kick them to the curb! And I don’t blame you for not wanting to wade into all that after your experience at HUD!

Congrats! That’s awesome you’re done with your mortgage and your annoying mortgage servicer.
I completely agree with the pros of guaranteed return, a secure source of shelter, and the benefits of less debt and boosting your savings rate. It may not be the optimal option mathematically, but it’s still a great option with lots of other perks.

Yeah, good riddance to Ocwen! Haha. Thanks for the congrats! The feeling of security is pretty awesome, even though we’re just settling into it, and though I know we could maybe be trading that for some lower returns, it’s a trade-off we’re happy to accept. :-)

Big congrats on paying off your mortgage. This is a huge achievement. It’s always very hard to say whether you’re better off paying your mortgage or invest the money instead, but the feeling of waking up in your OWN home must be priceless!

I’m so thrilled for you guys! What an exciting time! There’s something about seeing that zero balance listed that just makes my heart happy. (I only have my student loan payoff experience as a reference, but that was a pretty great feeling, too!) Cool to see the savings rate skyrocket now as a result!

Congratulations! That’s a huge accomplishment and it must be awesome being free from all that stress.

We still have a ways to go, but hoping the 3% rate we got on a 15 year mortgage a few years ago helps knock it out faster. We could add a lot more to the principal, but have decided to pour the extra money into our Vanguard fund instead after some analysis. Who knows… we may shift gears on that mindset one day. Again, congrats!

Thank you! It feels pretty spectacular. :-) And I don’t blame you at all for investing instead of paying down the mortgage more aggressively. Of course we are ALSO investing aggressively, so the payoff was made possible by gravy funds at year end. Here’s to lots of saving in 2017!

Thank you! And though we were definitely renters who couldn’t wait to have our own place, looking back, we both wish we’d rented longer. There are SO MANY headaches and expenses that come with home ownership, but grass is always greener… ;-)

Congrats you guys – this is super exciting and it’ll be so fun to watch your Vanguard balances increase faster over the remainder of the year!

I’m sorry USAA sold your mortgage and then you ended up with a crappy servicer! Both of my mortgages actually, the lenders either keep their mortgages on their books or keep the servicing if they sell the mortgage. That’s really common with credit unions and wasn’t a feature I was first looking for when I picked a mortgage lender, but I’m really glad it went this way!

Thanks, Leigh! Can’t wait to watch those Vg numbers climb faster now. :-D And yeah, it’s super weird that USAA sold that mortgage, because they are SO service-oriented. I’m completely happy with them in every way, though I have told them several times that we would never finance with them again, because they sold the first mortgage and shifted the rental mortgage to a different servicer. So far that servicer is a thousand times better than Ocwen, but they shouldn’t have handed the loan off to begin with! Even when we had our first mortgage with Bank of America, who I think of as a faceless monster, we at least dealt directly with BofA. Weird… But great that you haven’t had any servicing headaches!

Congratulations on becoming a homeowner. My younger brother just bought a home.and he still has a long way to go before its paid off but I’m proud of him for making such a big purchase and thinking about stability for the future if his three.children. The place.needs.some.reno work but he isn’t going to even.think about that until after he’s paid off his wedding which is scheduled.for June ’18. I hope to one day purchase my own home as well.

Thank you! It feels great. :-) And congrats to your brother — I wonder if he still has time to cut back on some expenses for the wedding, if it’s not for a year and a half. If it’s something he has to “pay off,” I worry that he’s overspending on it. :-)

That is awesome. Here is my question – you and Mr. ONL are very analytical people so I am quite curious to know if there was some sort of calculus you did to determine the “go” or “no go” on the mortgage payoff. I’m in a similar boat in that I hate debt and have the cash to pay it off (and I’ve been paying it down quicker than necessary already), however, I am earning much more than 3.279% (that’s my interest rate) on my investments. My mortgage costs $20,000/year and taking that permanently out of my annual budget reduces my annual expenditures significantly and thus reduces the number of income earning investments permanently as well. What analysis did you do to help in your decision? And, side note, you might just want to slap an open home equity line of credit on there as part of your backup to your backup to your backup plan, though something is telling me you have already done that. :) Congrats again.

Thanks! Though it could be a much longer discussion, the short answer is no, we didn’t do a specific calculation on this, mainly because we knew we were going to pay off the house before we quit our jobs (reasoning explained more fully here: https://ournextlife.com/2016/10/31/low-income/), and so the difference here is mostly a marginal one. Either pay off the last little bit now and have less invested for the last 12 months, or invest that money now, give it 12 more months to grow, and then pay off the mortgage over the course of the year. Even in a strong market year, we knew the difference on that amount would only amount to at most a few thousand dollars. So that’s our thinking. One note is that we would NOT have pulled money out of investments to do this — we were only willing to do it with cash on hand. Not that it sounds like you were talking about selling investments to pay off your mortgage, but we would not have wanted to incur capital gains taxes to pay off the house. But that’s specific to our situation and the high bracket we’re temporarily in. ;-) Several folks have suggested the HELOC, so it’s something we might look into… though the very thought makes me feel sick to my stomach. ;-)

I was suggesting an open line of credit that gives you cheap credit when available – I have one on my house as a just in case move. You would keep the balance at zero probably forever but if the $#%! does hit the fan, you don’t have to go through the effort of getting approved for a loan and all that. Remember that when you retire (and have your endless powder days) that it’s harder to get approved for loans because you may not have a regular paycheck and while you have a ton of assets, lenders rely more on cash flow to make their credit decisions. I remembered that post you wrote back in October. I live in SoCal so even though I only owe 35% of the total value, it’s still a chunk of change. I would actually sell some investments as I have a long term capital loss from the sale of a rental property that would offset any long term capital gains from the sale of stocks. I am FI whether that $20,000 stays in my budget and I use a combination of cash and sale of equities (with no taxable event), to pay it off or choose to just make the payment. I just have an itchy trigger finger and want it to go away some days. Of course your post today got me thinking again… :)

I knew that’s what you were suggesting! :-) I just watched some people get themselves into trouble with HELOCs, so I have a total kneejerk reaction to them, even though they serve an important purpose, as you note! And the point about much easier approval while we still have w-2 income is certainly important!

And as for your mortgage decision, I totally feel your itchiness! We had no need to pay ours off now, but it just felt right… how’s that for a thorough analysis? ;-) Ultimately we decided that there was no bad option, only good options, so it was kind of a game of eeny meeny miny mo!

I don’t think an open ended HELOC for folks as fiscally responsible as the two of you should make you feel anything but more secure. Scary for people who use their homes as checkbooks but not for the ONL family. I’m in paralysis of analysis mode right now. Hit my number a while back and every month continuing to chug upwards while I still work. I’m open about my 6/30 retirement date with my company so there is an end in sight. But I’m running the numbers different ways accounting for 30% increases in expenses, 30% decreases in portfolio value, is it better to pay it off or build more than 24 months into the cash balance to account for any possible timing issues? blah blah blah. I’m not anxious for the 6/30 date really as the winter is shaping up to be the most epic in what seems like forever (though my mountains aren’t in my neighborhood – I’m a bit jealous) but I wish there was a clear answer. Alas, no crystal ball here so I’ll just keep reassessing things every couple of months.

You’re right on the HELOC, of course… something worth considering this year. And I definitely understand about rerunning the numbers a million different ways! We have done hundreds of projections and budgets over the years. I think as long as you’re leaving a BIG buffer for health care, you’re probably more than fine — anyone doing that much analysis is clearly well prepared! Just stick to that 6/30 date and don’t let yourself fall into one more year syndrome! ;-)

Huge congrats to you guys! That is exciting news and you deserve to enjoy all the “sparkly feelings” that come with it. We’re working to pay down our mortgage as quickly as possible, but I have a feeling it’s going to outlive me. Still, every little bit counts!

Thank you, Gary! :-) We are feeling the sparklies in a big way. ;-) And it’s great you’re working so hard to pay your mortgage down — I totally agree with you that every little bit counts and is worth celebrating!

Wow, that is amazing. Unfortunately were I live, housing is extremely expensive and wages haven’t matched inflation. The idea of owning a home is a beautiful one but perhaps not a reality. Fingers crossed that one day I can feel as you do :)

We felt that way for a long time, and it was only the 2008 financial crisis and housing crash that came with it that let us buy our first place. Remember… renting, especially in expensive places, isn’t so bad! As long as you’re investing as much as you can, you’re just as likely to come out ahead!

One of my happiest memories is when I finally paid off my mortgage and became completely debt free. I recall vividly how it felt like I finally got a burden off my back. My family danced and celebrated.

Every time I read blog posts like this, it brings me back to those happy memories. Congratulations and thanks for sharing such an awesome accomplishment!

Congrats, congrats, congrats!
We forgot about the property taxes and never got the bill our first year after payoff, so we had a penalty. Good for you for planning better!
And why not pay off the rentals too? Just curious, but the same arguments would apply regarding peace of mind.

Thank you!! Eek — your property tax story is my worst nightmare. (Okay, maybe not actually the worst, but that is completely why I love and will miss escrow accounts… also I hate writing big checks!) As to the rental, it’s different math, and right now the tenant is making the payments for us, so requires different cashflow. Also that mortgage interest will continue to be deductible after we retire (unlike on our primary residence) because it’s a separate tax schedule and calculation. But all of that said, we could change our minds at any time! ;-)

That’s awesome! We became ‘true homeowners’ earlier this year as well. I also happened to write a big check today to pay off a line of credit for our 4th property free and clear… woo hoo! It was a great feeling.

We have a couple of other rental properties with mortgages, but we probably won’t pay those off. I’d rather use the money for more investing.

I have to agree though that the personal feeling of owning your home far exceeds the few percentage points that you might have made investing elsewhere.

Wow, congrats to you too!! And what timing with paying off your 4th property. ;-) And thanks for the backup on paying off vs. investing — of course we’re investing lots, too, but the peace of mind just in the first few days of really owning has been amazing!

That’s a terrible move. The interest rate is so low that it’s not worth paying off.
Heh heh, just joking. You have to do what’s right for your situation. When you both retire, the tax deduction will be useless. Also, at this point the stock market is so high that it’s probably a better choice to go a bit more conservative and pay off your mortgage. I think you made the right choice for your family. That’s awesome!
We’re keeping our mortgage for now because Mrs. RB40 still make good money. Once she retires, we’ll evaluate the situation again.

:::Thinking to self: “Oh no! Joe disapproves of our plan!::: Hahahaha. ;-) Yeah, to your point, it also felt weird to put all that money into markets that feel inflated, even if we are always reminding ourselves not to time the markets. What can I say, I’m weak sometimes. ;-) And I think keeping the mortgage while Mrs. RB40 is working makes tons of sense — and so does re-evaluating when she’s done working.

Not that it hasn’t been said 1000 times already, but big congrats to you!

That’s a big milestone, a gigantic checkbox in the “things needed for freedom” column. It must feel pretty great.

I fall into the camp of people that’s not paying off my mortgage. Over long periods of time it’s going to be worth it. It’s also worth saying that we don’t intend to live in our current home “forever”.

Thank you! :-) Gosh, yes — it feels like our biggest milestone to date. (Though we do have the biggest milestone of all coming up very soon!) I totally get why you wouldn’t pay off your mortgage early, and I think if you intend to move, that’s another discussion, too. Hooray for being able to figure out what feels best to each of us! :-)

Thank you!!! :-) That was one of my favorite dance parties ever. ;-) And I’m so with you on debt! Knowing now that we could cover all of our expenses with the crappiest McJob is a HUGE weight off… makes me feel so much better about our whole plan, and that’s not even getting into how much more we’ll be able to save now!

Congratulations, you guys! I remember when I first figured out we were within striking distance (a few years) of paying off our mortgage. I was so excited by the idea that I couldn’t sleep. From that point on I tracked every $, month by month, until we paid it off last September. Truly is the best feeling ever to look around at our house and land and know, “This is all ours!” Definitely gives more of a sense of reality than numbers in a bank account.

A few months after paying off the house, I discovered the early retirement community, and I knew we could make it happen because of our diligence in paying off the house. And more importantly, that seemed like the only worthwhile thing to do next – keep buying freedom with our extra disposable income!! I know the feeling when we hit FI will be incredible, and the journey – those incremental steps to the larger goal – is pretty amazing, too.

Thank you! And BIG CONGRATS for paying off your mortgage recently, too! That’s sooooo awesome! I love that you found the ER community and that it helped shift your goals… I can totally see that it would be a natural transition from mortgage payoff to big FI savings! It was pretty similar for us… we transitioned from student loan payoff to saving for our first place to saving like crazy for FI (while paying off the house, of course!). ;-)

Good on you guys and I can’t wait for the posts talking about your new savings rates and expenses per month without having a mortgage to worry about. Myself as I don’t plan to be in my home once our kids move out so we extended our mortgage for a whopping 2.36% and extended to the maximum term possible. This allows me to do what you mentioned in your post, maximize my savings and investment rate.

Thanks, Chris! :-) That’s pretty awesome that you have such a crazy low rate on your mortgage! I don’t blame you for wanting to milk that for all it’s worth… of course I can say that looking at your situation, but even if we’d had that rate, I’d still be thinking, “Ack! Get rid of the debt!” Hahaha.

I stumbled upon the FIRE community about six months, after I ditched facebook because I was wasting too much time caring about what other people were doing. Now I’m spending a lot of time “discovering” the FIRE community. 😊
Anyway, I found your blog and it resonates closest with our situation, although I think we have almost a decade on you. We appear to have similar values and you have excellent writing skills and are enjoyable to read.
We plan to semi semi-retire (if that’s a thing) for 5 years after pulling the plug with our professions. Part time jobs with very little stress, one of us will need a job with health insurance. I don’t trust the new administration to revamp our healthcare system anytime soon to make it affordable for us to purchase health insurance for 10 years (hubby) and 14 years for me without dipping too deep into our monthly budget. We’ve both seen how quickly health issues can change lives and bank accounts. I’m an RN and my husband works in finance.
Anyway, congrats on paying off your mortgage! Oh what a feeling that must be. We could pay ours off now, but are keeping that cash free to purchase land in the area we plan to relocate to. Our interest rate is low but it sometimes feels we are wasting money every month when we can just pay it off. But, we don’t have kids so as DINKS, we need all the tax help we can get while keeping cash ready to go when the best lot, with the best view of the mountains becomes available, of course, at the best price.
Anywho, just wanted to tell you that you have another reader who appreciates your perspective and knowledge.

Glad you found us! Nice to connect with someone in similar circumstances. :-) I hope you’re able to figure out the part-time work with health insurance — with no employer mandate under ACA, I think those jobs will be a lot harder to find!

Thanks for the congrats on the mortgage. :-) I still can’t quite believe that we did it and the house is OURS, but I bet the feeling will sink in over time. Your decision to keep your cash liquid for a land purchase makes tons of sense.

So glad that I found you guys. It’s funny that I used to work for a health insurance company before going back to nursing school. I feel so clueless about the insurance industry now so will look for your updates along the way. No pressure! 😉

It’s definitely a topic that we and a lot of people are super interested in, so we’ll keep talking health care semi-regularly! We should know more soon about whether ACA repeal is really happening and whether any replacement plan will take its place!

Congratulations on the mortgage pay-off! I think paying off the loan in full is a great idea for cash flow reasons.

What I suggest people avoid is paying down anything extra other than the full balance. If your employer evaporates overnight, it’s better to have liquid cash and investments than a lower mortgage balance (a HELOC mitigates the risk, but generally at a noticeably higher interest rate).

Thank you! I’d definitely agree with you if we were less far along in the journey, but we have AMPLE liquid cash and investments, being this close to early retirement, and aren’t imposing any sort of hardship by paying off the mortgage. So hooray! :-)

I am on Team No Mortgage, though I still have about 14 months until mine is gone. My rate is low, 2.85 percent, but it is an adjustable so we’ll make sure to get it gone before it expires. Of course, the caveat is that we have no other debt and we max our tax advantaged accounts every year.

I am also on Team Heloc as an appropriate way to make sure that your investment is still a little liquid after being paid off. We just did the paperwork to secure a 100,000 HELOC over the weekend. There were three reasons for this; First, that liquidity in case of real emergency. Second, a loan appears differently on your credit score than a credit card so having it open will fill the void left by our soon to be absent mortgage and keep our score high, lowering costs on things like insurance. Three, my rate is just .49% added to prime (which adjusts of course) but is roughly 3% right now, totaling about 3.5%. In case of disaster, I’d much rather be able to lay my hands on say 60,000 at 3.5% then run about my credit cards at 22% (the rate the charge for cash). 60,000 dollars is two years of our standard budget so it is far in excess of anything I would have sitting around in a bank account.

You’re so close to having yours paid off, too! That’s great you’ll close it out before the rate adjusts. And on the HELOC, enough people have suggested it for us to at least look into it! I think your reasons for opening the HELOC make total sense, and it’s on our list in the next few months to learn more about our options.

A lot of people don’t like to ‘put the house at risk’ but I figure if I’m living on 30% of my gross income that I have the shutzpa to not start dipping into the fund. :D You don’t get to where we are without having a pretty good sense of self control.

I’m fully in the “don’t want to put the house at risk” camp, so I know I come with that bias! :-) And you’re totally right about self-control… but I still have those emotional drivers that make me want to run away from certain decisions, too. ;-)

Congrats! Good for you. It’s a day that I dream about. About how it will feel. Will it feel different? But I do get upset thinking about our taxes. Even when our house is paid off, we’ll still be paying about $600/month just in real estate taxes. That for some people is a mortgage payment. Makes me want to vomit!

Thank you, Margaret! And it’s for sure true that our housing expenses don’t go to zero now, though we remind ourselves on a regular basis how much better it is to have schools and services paid for by those property taxes than to live in a society without them. ;-)

We just did this this month too and are waiting for our escrow and our various documents to pull through. Wells Fargo let us pay by check along with the payoff statement. We will post more details in our last monthly mortgage post coming up.

Maybe I’ll feel different after not writing a check next month but it just doesn’t seem like that big a deal to me. We were paying ~1200 for P and I and more than 800 for taxes and insurance each month. We still have to pay that 800+ and it increases every year. We don’t really own the house, we just rent it from the government, it feels like. If it were half our spending, that would be more of an accomplishment!

Yay!!!! Congrats to you guys! In truth, I think we could have paid with a check, too, but we wanted it to be more secure and fast. ;-) And you *might* be able to lower your insurance now since we’ve heard (but haven’t yet confirmed) that companies will offer you lower rates and higher deductibles if you don’t have a mortgage — worth checking out. And I know we still have to pay property taxes, but we consider those a small price to pay for the schools and services that those taxes fund. We would not prefer the alternative! ;-)

Personally I’d prefer more income tax and smaller property taxes, because income taxes are less risky– when times are bad they automatically adjust. But I guess high property taxes are part of the reason that housing costs are lower here since when you buy a house here you’re buying an increasing property tax stream. And it’s better than higher sales taxes that disproportionately hurt the poor.

Looking through their list,
Pretty much all economists are in favor of getting rid of the mortgage tax deduction for the reasons they state.

Pace Kate Baicker who is a better economist than I am, getting rid of employment subsidies only works in some environments. In an ACA environment, it’s great, but if the ACA is repealed and we go back to having pre-existing exclusion restrictions etc., adverse selection would cause many firms to be unable to afford health coverage without the subsidy. On the plus side, after enough people died and went bankrupt we would probably end up with single payer health insurance which is much more efficient. Assuming the US isn’t destroyed by nuclear weapons before then.

Eliminating corporate business tax is a bad idea for many reasons. That must be the libertarian dude.

How a consumption tax is designed is important. The VAT is one such tax, and there are people who think it discourages economic activity. Additionally empirically it isn’t clear that the income tax negatively affects work at all levels (though the economic theory is clear, the magnitude is not).

Yeah, most economists are agreed that we should either tax carbon emissions or do more cap and trade.

I don’t think most economists have a viewpoint on marijuana legalization. What really needs to be nailed down is whether or not it actually is harmless (or at least less harmful than alcohol).

Thanks for this rundown! We are obviously not economists, so it’s always interesting to learn more about differing views on all of this stuff. It certainly seems like a consumption tax would depress spending which would be worse for the economy as a whole, but that’s just based on a hunch, not actually economic knowledge.

Though the mortgage deduction is pretty well agreed upon for the reasons they say. It doesn’t increase homeownership (which was its stated purpose) and just increases house size which is bad for many reasons.

Since I paid off my mortgage before you, pretty sure they take one of the gold stars off your paid off mortgage paper/deed:) Always excited to see the faceless ONL family doing well.

I’m also excited to take that mortgage payment and direct into investments. Are you going to do anything differently for your taxes, insurance, etc? That’s our next step, I think we are taking our escrow refund and in our case taking some of the rental income aside for the payments later in the year.

Aw, dude! Give me that gold star back! And you know we have faces — you’ve seen one of them! ;-) Hahaha. Once we get the lien cleared with the county, we are definitely going to see what we can do to lower our insurance costs, probably by raising the deductible to $2000 or more. Re: taxes, I’m not sure that we have options, but I will for sure look into it. (Do you have tips??)

Oh yes, that’s true — but also an entirely different deal from what we’re doing. We’re just small-time landlords with a single property, not big developers who can leverage tax incentives and such. :-)

This is so exciting!!! We are not anywhere near paying off our principal mortgage (and won’t do it before we move abroad), but we are planning to pay off our rental property in Chile at the end of this year, and I can just feel the excitement of it already! :) Congratulations! I know you’re now more than two months in, but it’s got to still feel pretty darn good! :)

I think the whole point in me getting up in the morning and working and investing is to someday own the house I live in… So, that what I did. I paid the thing off and saved over 100K if I gone into 15 years in keeping the loan. I save 100K instantly, and can invest it now the way I want to… It’s better to pay your house than to gamble with your health, jobs, the market, and dumb decisions from money managers. My house is now paid off, and now I can working on making money without playing around with where my family sleeps. I won’t play those games with the people I love and cherish.
Invest or pay off house??? That’s a no brain decision… THE HOUSE ALWAYS WINS (My House, not theirs!).

Yes, I’m sure with choice, people can find ways where its better to invest the money than pay their primary house off. However, when I borrow money, its not my money if I am obligated to pay it back. In which case — I got a home loan with the intention to pay the loan back early or by the end of the term.

Therefore, any money I earn technically speaking, is not my money if my debt is still over my head. You can’t avoid reality and think 100k you have in the bank from earned savings, with a debt of 100k I can start living it up and be less responsible when the money is not mine… nor is the house.

So, if I place less value in the house over the value of money I have saved, then I would simply sell the house, and pay the loan off and then invest free as bird and not owe a dime.

You’re preaching to the choir. ;-) But you also know that lots of people don’t share your view, and have the mindset (which I understand but don’t agree with) that you paying off a mortgage increases your opportunity cost (because you can’t invest that money, and when interest rates are low, your earnings should be able to outpace your interest payments), and why shouldn’t you use other people’s money to increase your investment ability if they are freely and cheaply lending you money? Again, don’t agree, but I get it!

We are about $2,300 away from being debt-free! Our mortgage is the last piece. I have been really chomping at the bit to get it wiped out completely. I just looked at my escrow account and see that its balance is about $1900. I think I’ll stop in to the bank and talk with someone in person to try to figure out how best to handle the final payment and escrow balance. I’ve enjoyed reading all of the comments here. I agree with the person who said a big part of why we go to work every day is to pay off our mortgage. I think I will feel very free not having debt. It will be the first time I haven’t had debt since I was 25 and broke! I’m 49 now. Of course, we need to update our plumbing and other things, but I want to bask for a bit in being debt-free and seeing what that feels like before I start lining up expensive projects.

Wohoooooo! That is so awesome! When we paid ours off, we got two escrow checks — one for the biggest chunk, and then a second, much smaller chunk for whatever back interest they owed us. Then, a few weeks later, we got the canceled note mailed back to us, which I hear we may need to get the deed from the county recorder. But I suppose it could be different for different lenders our counties. I’m so excited for you that you’ll be totally debt-free soon! And I agree with you — enjoy the debt-free feeling a while, and then focus on the expensive stuff. :-D

You know we love this. ;-) They are so beyond incompetent and malicious, and it’s nice to see them having to own up to that. We like to think we helped the CPPB lawsuit happen with all of our complaints to them! Thank you for sharing!

Well done and so good to read about because it gives me drive. I’m 36 now and have been going really hard on the beast for 5 years now. Some people might think, 5 years!? Should be paid by now. But the thing is, house cost $600k and we only earned $100k a year.. well it’s now down to just a tadd above $300k and I earn much more, so pretty determined to get the monkey off our back within the next 3 years.

I must say however that I haven’t been as dedicated as some. We’ve spent a good amount on great holidays, lunches out, new vehicles and renovations because I believe in balance. I’d be pissed if we died tomorrow and I do not regret that spending whatsoever. Travel is the best thing anyone can do in my opinion but to us, balance is also a key factor for the time being. Long as we have more money than the previous year, I’m happy with our progress.

Now that we have all the new stuff I feel we’re able to go hard at the mortgage paydown so hre we go!!

Paid off my mortgage 13 years ago, one year before I retired as a teacher in the USA…love it, have no debts, plenty of savings, can do as I please. 2 yrs ago, got rid of all carpet–put in wood floors-also new bathroom and kitchen floors—new baseboards. the peace of mind is the best, and now I just concentrate on the body, health nut ;), food, exercise, meditation. Send my grandson care packages in college, Life is good!

I paid mine off this year with USAA too!! The sold my note to NationStar debt collections worst of the worst. USAA should be ashamed. I was making extra payments originally when USAA held the note and they were applied to the principal but not with NationStar they started stacking the payments instead of applying them to the principal. I had them correct that then a few other horrible adventures with them and that was enough. I took bonuses, sold stuff, and eliminated the loan. Thanks for the insurance tip about making sure I am named and not USAA Bank. I am taking care of that now. Financially Free!! – Mike

Congrats! Our rental mortgage went to Nationstar and is still with them — we don’t hate them as much as Ocwen, mainly just because we aren’t prepaying that mortgage, so there’s only so much they can screw up. But yeah, the transition was super rocky, and I’m sure some expletives escaped me. ;-) CONGRATS AGAIN!!

Alright, first of all. WOW. I mean WOW. Where have you people been? This is INSANE. The craziest part is that all of which people call F.I.R.E or everything you’ve just described and have on this entire website is something I’ve been PREACHING for 6 years to my wife (PS, she converted and she’s fully on board)

To think ALL of this knowledge was self taught, nobody around me, and I mean NOBODY around me (as you know) is motivated and obsessed to pay their mortgage down.

When you said PEACE OF MIND. I ALMOST JUMPED out of my seat. YES! Finally, someone who gets it. Someone who understands it’s NOT always about numbers.

To give you a quick overview, At 28 I was 55K in debt largely due to DOING THE TOTAL OPPOSITE of what I should have been doing. Today I’m 37.

We have roughly about 1 year left on a 500K mortgage to POP THAT CHAMPAGNE BABY and make a similar post to yours.

We have 5 rental properties that are generating roughly about 5K a month in “forced savings” which is what I like to call them.

THREE KIDS and eagerly waiting that day man. I can’t wait.

As fate would have it, I’m now reading EVERYTHING on everyone’s blogs and it’s mind blowing to think all of this was accomplished on my own.

truth be told, if I liquidated my properties, I’d be mortgage free 6 months ago, but I’ve got long terms plans as much as I have shot term plans.

I purchased our home in 2009 (New build) with the hopes of paying it off in 10 years. I’m happy to say my Wife and I are on track to have it paid by calendar end of this year. As a Wisconsinite, this is the first time I’m looking forward to the weather turning colder!

I am 65 and today I paid my last payment on my mortgage, I live on my own and worried constantly, ‘ if I couldn’t pay my mortgage I would then be homeless’ because I couldn’t afford to rent, the relief is unbelievable, I will continue to work for sanity reasons, but the pressure is off, what to do next ?

Huge congrats Judy!!! :-D That must feel incredible. I know not everyone recommends paying off your mortgage, especially if you have a low interest rate, but I will totally back you up that you can’t put a price tag on the peace of mind that comes from knowing you only have to cover property tax and utilities, not an entire mortgage, to avoid a worst-case outcome. Congrats again!!

My husband and I paid off our first house and then our second (investing the first house’s proceeds). I was the driver pushing for both – mainly because I grew up poor and was always afraid of losing the roof over my head. While I know there are tons of number crunchers out there who would say not to, I’m convinced paying these off not only gave me piece of mind but let us dump piles of money into the market. I site paying off our homes in the top five of how we reached FI. Thanks for a great and (as always) insightful article.

Congrats, Rachel! That’s awesome! And congrats especially for ignoring the number crunchers and following your gut on this. You absolutely got the benefit of the peace of mind, even if that’s harder to price out. ;-)

Very smart decision for both of you, you should apply for HELOC as emergency fund and have a lien against your home to be save from someone suing you.Most lawyer when they see there a lien on your home they wouldnt bother to go after your home.

I’m in the same boat as you all are. I’m 38 (wife’s 35) and we are a family of 6 with a paid off mortgage. Now that you all have paid off your mortgage, what are you next steps in investing (out of curiosity)? I’m always looking for ways to increase our returns and plan for the future so its nice to hear from other people who are debt free. thanks!

Hi Nate — We paid off the house about 10 months ago, and we’ve used the extra money each month to invest in index funds, which is our primary investing strategy for our early retirement, which begins in under three weeks! But depending on your strategy, you could boost your market investments or look at other options like rental properties.

Congratulations! I am 3 months away from that eye popping experience! I live in California so my property taxes are CRAZY HIGH. It will be nice not to have to worry about how I’m going to come up with an “extra” 9K every year.

Wohoo! So exciting to be so close! Though if you think CA property taxes are high, I encourage you to look at Texas and several other high property tax states. ;-) The CA problem is expensive property values that the taxes get calculated on.

I just paid my mortgage off and now I am totally debt free…..no car payments, no credit card bills, no student loans. It is the most amazing feeling in the world. I wake up everyday no longer stressed out. I splurge a little bit more. I buy the best for my two furbabies. I’m not afraid to spend money anymore.

Recently my brother called me because he forgot about a fine he had and needed 700.00. I didn’t bat an eye, I just said no problem (although) Im pretty sure he probably won’t pay me back……..can’t get mad though because he has done the same for me. If I were still in debt, I would not have been so generous.

I have live my the below philosophy for years and it has finally paid off.
1. Spend some – you need to enjoy your life today
2. Save some – for the minor emergenices like job loss or car repair
3. Invest some – in case you live long enough to get old
4. Give some away – Be altruistic and help others.

Now that I am finally debt free, I am 54 and although I have dream of being able to quit my job, now that I am in the position to do so, I am getting cold feet. At my age, I can’t afford to make any big financial mistakes as I will not have anytime to recover but my expenses are so low, I could definitely work a part time job and still have money left over to save. I

I have about 300k saved up and according to my math, 300k could last be about 40 years if I just stay in the house and watched TV all day but I want to enjoy life and so I will switch to semi-retirement. If you throw in social security, my financial advisor says my money should last about 96 years……woohoo.

I am thinking I will work about six more months.I got solar panels for my house and I want to pay them off completely before pulling the plug. I figured about 2000 a month for six months and my solar panels will be paid for free and clear. So now I will be producing free energy and the best part? because I can sell the excess energy back to the power company, I may even make enough to pay my water bill, sewage bill and trash bill…….the state I live in guarantees me a minimum of 450.00 per year for 20 years.

Does it get any better? Being debt free is freedom and I am looking forward to beginning my new life…….now which country should I visit first for a month. Costa RIca or Panama?

Congrats, Nanci! That’s so awesome! Mark visited Costa Rica several years back and enjoyed that a lot, but neither of us has been to Panama. ;-) It’s great you have the solar deal, too, to give you some added security and reduce future expenses. I know several states are changing their rules, but if you own the panels, very worst case at least you have free electricity!

We, too, paid off our house in 5 years (and 7 months), and now are completely, fully debt free for 2 years. That saving rate? Surely went up. We also stopped fretting small things, and while didn’t change majorly our frugal living style, do enjoy perks of coffee dates and better quality grocery. Now, we are (almost) ready to put a serious (50% at least) downpayment on our “future forever home”, to which we will relocate soon enough (and sell this one for, oh, Gosh, almost double what we paid for it!). Anyway, congrats. Personally, coming from where I come, I have no idea why in the world people accumulate debt. And yes, college, cars AND mortgage are all debt.

Wohooooo! So awesome! I especially love that you’re treating yourself just a little more now that your mortgage is paid off. :-) And it’s so interesting to see how individual feelings on debt are. Some people are fine carrying a mortgage, others (like you and me) hate any and all debt, and some reject the idea of a mortgage altogether and plan to rent for life. I do love the diversity of thinking, but what’s most important is that you do what’s right for YOU, not for anyone else. ;-)

Just jumped on your site today and am finding it refreshing so many are joining the paid off mortgage club. We paid ours off yrs ago after our third child was born. The feeling was awesome. It was met, however, with lots of opposition from both family and friends because we weren’t using the “equity” to invest. We made it through the .com crash and housing bubble. Our marriage remains strong, our kids are now out of the house and we are looking forward to the years ahead with minimal retirement needs. The lack of stress has been a real game changer and opened other opportunities.

It is crazy to me how many people have been brainwashed by the lenders into believing that equity is something that must be tapped and leveraged, risk be damned, instead of creating actual financial security for yourself. Good for you guys for knowing what was right for you and sticking to that — and for seeing the many other opportunities that come when you don’t leverage yourself to the hilt! ;-)

Congratulations on paying off your principal house. My wife and I did the same with our home in 2016, 11 years after we moved in.

We purchased our house during the tail end of the housing boom in late 2004. At the time, we decided to only take out a loan based on my income, as my wife was in-between jobs. Plus, we didn’t pursue non-conventional loans (i.e. stated-income, interest-only, etc.) nor felt we needed to have a mortgage payment that was contingent on 2 incomes. However, we did take out a 5-year ARM (5-year fixed, then adjustable every year), and a second mortgage to prevent paying the PMI.

Over time, both of our incomes grew significantly due to job changes, our savings grew, and so did our comfort level in that we had a good financial cushion in the event of losing employment. In 2007, we certainly felt the ramifications of the housing crisis by seeing property values decrease everywhere in a short period of time. By the time the housing crisis was nearing its end in and home values began to rise in 2011, our house was about 33% of the purchase value.

Fortunately, we still had our good-paying jobs, and we had a child in 2008, so we were in a position of making a decision to weather through the crisis, short sell the house (possibly walking away into foreclosure), or buy another house and rent out our current home. Since we were doing well financially (income had doubled when we first purchased the home), and we didn’t want to take a hit on our credit like we saw among our friends who walked away by choice, we decided to stay put and continue living in our house, but felt that we can make significant strides in lowering our mortgage debt.

Based on the amount that we owed, I came up with a plan to pay off the house in 5 years and within our financial means (i.e. kept a healthy savings balance, contributed to retirement, no other debts, etc.). This approach was the complete opposite of what everyone else was doing a the time (i.e. short-selling, foreclosure, etc.). We maintained our discipline to pay off the mortgage with a healthy additional principal every month. We had an adjustable mortgage that renewed every year based on the 1-year LIBOR rate, which was ridiculously low between 2011-2016 (less than 1%), so there was no reason to re-finance since the rates were higher than the LIBOR plus the 2.25% markup per the terms of the ARM loan. It took 4 years and 9 months from the time we decided to pay off our mortgage to the time we sent in the final payment.

A house is an important asset, financially and personally. Nobody is financially responsible for the house other than the owner. There is no reason anyone should purchase a home beyond their financial means without considering the possibility of paying it off early, rather than make very costly total payments throughout the entire duration of the loan. Everyone should understand that no one puts a gun to our heads when buying a house. It’s a choice and with that choice comes responsibility of paying back the money that you borrow.

It’s been almost 2 years since we’ve been free and clear of a mortgage. We’re about to build a casita in our backyard and we are able to pay for its construction in cash. Also, our house value has increased significantly in the past 3 years, well past the original purchase of the house. At times I regret not taking the financial risk to purchase a bigger home when prices were low, but my wife and I didn’t have the interest or ambition to be landlords or juggle our finances to operate and maintain multiple households – we just want to keep things simple, which means getting rid of debt as much – and as soon – as possible.

Congrats to you as well! It sounds like you made a long string of good decisions, and I applaud you for not walking away during the housing crisis. We also had friends and relatives who could afford the payment but decided on foreclosure or short sales anyway, and later regretted their decisions. So I’m sure it was tough to see that you were upside down on your mortgage and decide to stick it out, but you’re now being rewarded for that. Well done!

Thanks. We just met with our financial planner and he still tells us it was a bad decision to pay off the mortgage because of the current low interest rates. “It’s like borrowing money for free!” I just wish his fees were free.

We did it!!!! And today I went back to your list of three things to check in and now those are done too!!!! We are 100% debt free. It’s absolutely unreal. I always felt like this was my house but I suddenly want to repair or fix up all the little upkeep things. What a day!

We had a fine experience with BofA, super easy. One oddball thing though, print your statements when you get close to the end. Our final payment happened and when it posted the entire account was gone! No link to our mortgage account anywhere. We never saw a zero balance posted. We have the deed paperwork from the county and the balance of our impound account is being mailed out but we have no records. We called and they are sending us a paid in full letter and the December statement. I thought that was very very weird. But as long as everything is in order I’m not getting hung up on nostalgia. I happened to know- thanks to the list here- what to look for at closing it out so we know what was paid to the county etc. otherwise everything happened as planned! Now onto the next goal!

We have an 18 year old daughter. She just chose a less expensive college to which she had received significant scholarships over a more expensive one (Centre over Wesleyan). It was totally her choice. Really! But, anyways, since she chose we were able to use the excess college funds we had saved to pay off our home this week! We are totally debt free. 4 years of my daughter’s college are saved for in a 529, we have decent savings, no student loans, no car loans, no mortgage. For the first time in our life we feel wealthy in the sense that our debt burden is down considerably. It is interesting — our net worth is the same (since we just used the savings to pay off the mortgage). But the psychological difference in my case? Oh, man, it’s crazy. I just feel so much freer!

I Paid off my home last year 140k original loan was at 180k age 31 . I make fairly good wage at work. But now I can plan on working part time at my job and taking up another fun job at my leisure like working at a gym or something. I barely touch my paycheck as is now. I have no car payments and no mortgage. I managed to save up $26,000 in year and a half and this year is still not over. I plan on saving and saving until the market takes a hit then buy properties and create more income. I am free now. I will never worry about having a roof over my head if I ever get laid off or unable to work. I can travel more and do things that would be emotionally compelling to me. I had to sell off a rental to pay off my home. I figure I would rather have the peace of mind and can always buy rentals again as the economy allows. Do it and be free and do things you love. We should control the job market and not our jobs controlling our lives. If anyone wants help on how to be frugal and create freedom add me on Instagram Vegan_gains2019

I’m 41 and just wired the final 36,000 to my Mr Cooper mortgage. It doesn’t feel real yet. We have no car payments, student loans or credit card debt. I’ve been waiting for this for so long. It feels a little anti climatic, but maybe it hasn’t sunk in yet. I make 125k a year, I think the possibilities are going to be endless.

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